Jumping The Shark Tank
At Mercenary Traders The Next Global Financial Crisis: Chinese Meltdown, U.S. Dollar Strength And The 'Original Sin' Pose Significant Risks To Emerging Markets...
MercenaryT,
"Then 2008 happened - and in broader terms, it slowly sunk in just how much time and seasoning it takes to build truly resilient and robust free market structures (A USA specialty)."
We Natter: LMAO!!! We used to export Harley's and Zippo's, now its just bad debentures and the smoke from them burning up.
"But such an act - (devaluing the RMB) not to mention China's willingness in general to "export deflation" by cutting prices - is extremely harmful to EM nations (which have racked up large debt levels). "
We Natter: Spot on and another great read. RMB declines, cost of China imports (inputs) increases in RMB. In RMB terms it seems like China is importing more, when they are in fact importing the same quantities or less. China export prices rise in RMB, while dollar adjusted prices from China should decline.
By devaluing China effectively squeezes what little margin they have, mostly selling at a loss to keep people employed rather than rebelling. China exports overcapacity of labor and inputs. Semantics I know, hence "export deflation" in quote marks.
With EM, Europe and US heading further into the tank, to varying degrees of submersion, and thus dunking China further, it will be interesting to see what happens. I am reminded of the Fonz jumping the tank and the aftereffects.
MercenaryT,
"Then 2008 happened - and in broader terms, it slowly sunk in just how much time and seasoning it takes to build truly resilient and robust free market structures (A USA specialty)."
We Natter: LMAO!!! We used to export Harley's and Zippo's, now its just bad debentures and the smoke from them burning up.
"But such an act - (devaluing the RMB) not to mention China's willingness in general to "export deflation" by cutting prices - is extremely harmful to EM nations (which have racked up large debt levels). "
We Natter: Spot on and another great read. RMB declines, cost of China imports (inputs) increases in RMB. In RMB terms it seems like China is importing more, when they are in fact importing the same quantities or less. China export prices rise in RMB, while dollar adjusted prices from China should decline.
By devaluing China effectively squeezes what little margin they have, mostly selling at a loss to keep people employed rather than rebelling. China exports overcapacity of labor and inputs. Semantics I know, hence "export deflation" in quote marks.
With EM, Europe and US heading further into the tank, to varying degrees of submersion, and thus dunking China further, it will be interesting to see what happens. I am reminded of the Fonz jumping the tank and the aftereffects.
Comments